To ‘D’ or not to ‘DSP’: the question for Adobe

Contact: Scott Denne

Could Adobe be the company to deliver an exit to some of programmatic advertising’s pioneers? Though the shift to programmatic (i.e., automated) media buying is reshaping the landscape of advertising – in digital and beyond – the companies that built the first programmatic media buying platforms (most commonly called demand-side platforms, or DSPs, in the ad-tech space) have seen almost no exits.

Owning a media buying platform fits squarely with Adobe’s strategy of building out a wide suite of marketing software. While other enterprises have wavered from this approach – Oracle took a data-focused strategy, while IBM is turning more toward services and Teradata is abandoning its marketing software ambitions altogether – Adobe has stayed the course with a software-led roadmap. Its strategy has been to scoop up marketing vendors whose products are ancillary related to ones where it has an established channel. For example, its acquired Demdex (an audience management platform) and Efficient Frontier (a paid search platform) units sell largely to existing Adobe Analytics (fka Omniture) customers. It’s been a successful strategy – sales of the company’s Marketing Cloud products grew 16% last year to $1.4bn.

In the past, a combination of higher prices and business models that were more focused on services than software may have kept Adobe out of this segment of ad tech. Now would be a good time for it to get in as more players are proving that they can build direct relationships (and therefore more predictable revenue) with marketers. Currently, many of the large ad agencies still treat media buying platforms as a media purchase, rather than a software purchase, though that’s slowly changing and more agencies are adopting an approach where they advise their clients on which platforms to use. Buying into this market now would enable Adobe to leverage its existing partnerships with agencies – Publicis Groupe was named its ‘Marketing Partner of the Year’ at a recent Adobe sales conference.

Adobe does have media buying capabilities today. It has built display buying services off of the Efficient Frontier (now Adobe Media Optimizer) pickup, though that platform wasn’t initially built for real-time bidding. We view DataXu and Turn as the two best targets for Adobe to explore. Among other capabilities, DataXu has been building out its video advertising and multi-touch attribution technology, which would plug other holes for Adobe. Turn, for its part, has invested in workflow and data analysis capabilities that would align well with Adobe Analytics and possibly with some of the creative software tools that make up a large part of Adobe’s presence in the advertising space.

Adobe isn’t the only vendor that could make a move in this segment. We’ll have a detailed report on the exit outlook for this corner of the advertising software market in our next 451 Market Insight.

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